Question

A company has a factory that is designed so that it is most efficient (average unit cost is minimized) when producing 15,800 units of output each month. However, it has an absolute maximum output capability of 19,000 units per month, and can produce as little as 7,000 units per month without corporate headquarters shifting production to another plant. If the factory produces 11,360 units in October, what is the capacity utilization rate in October for this factory?

Answer 1

71.9%

Step-by-step explanation:

Calculation for the capacity utilization rate in October for this factory

October capacity utilization rate =11,360/15,800

October capacity utilization rate=0.719*100

October capacity utilization rate=71.9%

Therefore the capacity utilization rate in October for this factory will be 71.9%